Next in line for a bail-out?

Cyprus looks as though it could be taking over the presidency of the Council of Ministers just days after becoming the fifth eurozone country to be bailed out.

The country’s banks, which have large exposure to Greece, are struggling to meet a deadline of 30 June, when they must meet new capitalisation requirements. “The issue is urgent,” said Vasos Shiarly, the country’s finance minister, on Monday (11 June). “We know the recapitalisation of the banks must be completed by 30 June and there are a few days left.”

However, he suggested that any request for financial assistance would – unlike Spain’s proposed bail-out – not be limited simply to the banking sector. “When one applies to the support mechanism, you take into account all the facts, including needs which may arise in coming periods,” Shiarly said. “Consequently, it would be a comprehensive request covering not only present circumstances and the recapitalisation of the banks but also future needs.”

Cyprus, which accounts for 0.2% of the economy of the eurozone, has previously been reluctant to call on the EU for help. Last year it took a three-year €2.5 billion loan from Russia.

Bank’s woes

The island’s Popular Bank, the second-biggest in the country, needs €1.8bn to meet this month’s capital requirement deadline. This represents about 10% of Cyprus’s entire gross domestic product (GDP). A request for eurozone support could come as early as this weekend.